Marine insurance is governed by a body of rules distinct from general insurance law, gathered in Title VII of the French Insurance Code. Two differences explain why a marine casualty is not handled like an ordinary one: the limitation period is two years, and the assured has, in certain cases, a right that exists nowhere else, abandonment, allowing him to give up the insured property to underwriters against payment of the full sum insured.
Hull, cargo and P&I: three policies, three logics
Hull insurance covers the vessel herself, her damage and loss and, depending on the terms, part of third party liabilities. Cargo insurance covers the goods in transit irrespective of the carrier’s liability, which is why it frequently pays out before that liability has been determined at all. Protection and indemnity cover, placed with a mutual club, takes on the owner’s liabilities falling outside the first two: crew injury, pollution, wreck removal, damage to port installations.
A single event generally engages all three, and most of the work consists in determining which responds first, which then exercises recourse against the other, and on what basis. The cargo underwriter who indemnifies his assured is subrogated to his rights against the carrier and will carry the claim forward. That mechanism explains a fact of practice: in most cargo files the shipper is no longer a party fifteen days after the casualty.
Does your situation carry this risk? A first exchange allows us to measure it and to say how the matter would be organised.
Two years, and the clock starts earlier than expected
Article L. 172-31 of the Insurance Code, as amended by Order no. 2011-839 of 15 July 2011, provides that actions arising from the contract of insurance are time barred after two years. That is short for a marine file, where the joint survey, translation of documents and tracing of foreign parties easily consume a year. The difficulty lies less in the duration than in the starting point, which varies with the nature of the action and the event relied upon, and which is worth settling when the file is opened rather than when underwriters raise the bar.
To that period is added the distinct one-year limit for claims against the carrier. An assured who waits for underwriters’ decision before suing the carrier frequently lets the second expire in the belief that he is protected by the first.
Abandonment, a right peculiar to marine insurance
Article L. 172-24 of the Insurance Code provides that damage and loss are settled as average, save the assured’s option to elect abandonment in the cases determined by law or by agreement. Article L. 172-27 sets out the regime: abandonment may be neither partial nor conditional, it transfers the assured’s rights to underwriters, who must then pay the whole sum insured, and that transfer takes effect retroactively from the moment the assured gave notice of his intention to abandon. The election is therefore irreversible and turns on a notice. An owner whose vessel is aground, technically recoverable but commercially doomed, has every interest in having both branches of the option costed before writing anything to his underwriters.
Based in Paris, the firm acts in all French ports, from Le Havre to Marseille and from Nantes-Saint-Nazaire to Antibes, as well as before the Chambre arbitrale maritime de Paris, and works in English with shipowners, P&I clubs and foreign counsel.
Typical cases handled
The situations below are illustrative, anonymised scenarios. They show when the firm steps in and what the work consists of.
Two-year time bar during an open claim
A loss was notified, but the insurer delays its position and the two-year period approaches. The firm interrupts the time bar and puts the insurer on notice to decide on cover.
Abandonment refused
The owner declares the vessel a total loss; the insurer refuses abandonment. The work bears on the conditions of abandonment, on the joint survey and on the indemnity due.
Exclusion of cover invoked
The hull insurer invokes unseaworthiness to deny cover. The firm contests proof of the insured’s fault and the scope of the exclusion clause.
Does your situation carry this risk? A first exchange allows us to measure it and to say how the matter would be organised.
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Frequently Asked Questions
What is the limitation period in marine insurance?
Two years under French law for actions arising from the insurance contract, the starting point depending on the event relied on, and the parties cannot shorten it by agreement. The period is easily overlooked because negotiations with the insurer continue while it runs, and correspondence does not stop it unless it amounts to an acknowledgement or to another recognised interrupting act. Where a foreign law governs the policy, the period may be entirely different, so the applicable law is identified when the file is opened rather than when the claim is refused.
What is abandonment?
It is the mechanism by which the assured transfers the insured property to underwriters and claims the full sum insured, in the cases the law or the policy allows, such as total loss, a wreck that cannot be recovered or prolonged detention. It is not a general option: the grounds are limited, the declaration must be made within the prescribed period and in the required form, and it is irrevocable once accepted. Because abandonment turns a partial loss claim into a total loss claim, it is analysed alongside the constructive total loss calculation before it is declared.
Can cargo underwriters pursue the carrier?
Yes, by subrogation, once the indemnity has been paid, and that recourse is central to the economics of cargo insurance. The subrogated insurer takes the assured’s claim as it stands, with its time bar, its limits and its defences, so a claim already barred by the one year Hague-Visby period cannot be revived by payment. The practical consequence for the assured is that the carrier must be put on notice and the time bar protected while the insurance claim is still being discussed, because failing to preserve the recourse can reduce the indemnity itself.
What is the difference between hull, cargo and P and I cover?
Hull and machinery insures the vessel herself against physical damage and certain collision liabilities. Cargo insurance covers the goods carried, usually on Institute Cargo Clauses A, B or C, and answers to the trader rather than to the shipowner. Protection and indemnity cover, written by mutual clubs, answers for third party liabilities: crew, pollution, wreck removal, cargo claims and collision liability beyond the hull policy. The three overlap at the edges and a single casualty routinely engages all of them, which is why notice is given under each policy rather than under the one that seems closest.
When must a casualty be notified, and what happens next?
Immediately, and in the form the policy requires, because late notification is a recurrent ground of refusal and because early surveys preserve the evidence. The insurer appoints a surveyor, and the assured is expected to take reasonable steps to avert or minimise the loss, the cost of which is generally recoverable. Correspondence with the insurer is conducted on the footing that a court will read it later: statements about cause, value and condition made in the first days are very difficult to correct afterwards.
On what grounds do underwriters refuse cover?
Most often unseaworthiness, breach of a warranty or of a condition of the policy, misrepresentation or non disclosure when the risk was placed, wilful misconduct, a trading limits or navigation breach, and the sanctions clause. Each has its own legal test, and a refusal letter reciting several grounds usually rests on one of them. The response is built on the policy wording, the placing documents and the technical file, and a refusal is not the end of the matter: negotiated outcomes are frequent once the assured shows that the ground relied on is not made out.